Last night, the EIA released the latest data showing that last week, U.S. EIA oil reserves exceeded expectations by nearly 19 million barrels, the largest increase since February 2021, and the total amount reached the highest level in the past two years since then. Gasoline inventories increased by more than 4.1 million barrels, and inventories in the Cushing area, the futures delivery location, increased by more than 2.5 million barrels, the largest increase since December 2021. At the same time, U.S. oil exports fell the most since May 2021, both suggesting poor demand.
During the U.S. stock market, both U.S. and Burundi oil rose by more than 4% during the day. As of the close of the morning, WTI February crude oil futures closed up 3.05%, rising for five consecutive days. Brent March crude oil futures closed up 3.21%.
Yang An, head of energy and chemical research at Haitong Futures, told reporters that demand has brought energy to the upward trend in oil prices. After China’s private refineries sharply increased gasoline prices, U.S. gasoline also rebounded sharply last night, and cracking profits were significantly wider. In the end, crude oil fell from It rose nearly 5% from its intraday low, and its strong performance exceeded most investors’ expectations. The oil prices reported in Changyang reversed the decline after the New Year in one fell swoop. The external market set a new high in the past five trading days. The market sentiment improved significantly. The domestic market, driven by crude oil, the entire crude oil sector rose sharply. After the general rebound of industrial products in the early stage, crude oil The sector took over and began to exert force, rebounding from the low level, leading the rise in the entire commodity market in the night session. After experiencing continuous oscillations, oil prices have gradually digested the shadow of the worst start-of-year slump in 30 years. Although there are still doubts about the recovery of demand, crude oil still tries to start to increase the price focus when the overall market atmosphere is warm and there is room for imagination.
The U.S. Energy Information Administration (EIA) said on Tuesday that crude oil and refined product prices are expected to fall in 2023 and 2024. EIA forecasts that Brent crude oil prices will average $83.10/barrel in 2023, down $9.26 from last month’s estimate and 18% below the 2022 average price of $100.94/barrel. The EIA also lowered its forecast for WTI crude oil in 2023 by US$9.18 to US$77.18/barrel, which is lower than the average price estimate of US$94.19/barrel in 2022. The agency expects WTI crude oil to be US$71.57/barrel and Brent crude oil to be US$77.57/barrel in 2024.
“EIA lowered its oil price forecast for this year and next, mainly based on its judgment that the global crude oil market will once again be in surplus. It predicts that the increase in global oil inventories will put downward pressure on crude oil prices.” Yang An said.
“Historically, the price adjustments in EIA’s monthly reports lag behind the market performance. Generally, during price declines, monthly reports mainly lower price expectations.” Li Yunxu said that in recent months, EIA’s demand increase in 2023 has been The forecast is the most pessimistic among the three major institutions: IEA, EIA, and OPEC. For example, in its December 2022 monthly report, this estimate was only 1 million barrels per day. This monthly report was adjusted to 1.05 million barrels per day, but in December 2022 The monthly IEA and OPEC monthly reports forecast demand growth in 2023 at 1.7 million barrels per day and 2.2 million barrels per day respectively.
In Yang An’s view, EIA’s judgment is overly pessimistic. Domestic investors generally hold positive and optimistic forecasts for the restart of China’s demand side in 2023, believing that China’s contribution to global crude oil demand in 2023 will exceed expectations.
Judging from the potential for recovery of China’s travel demand, the mainstream expectation for global demand growth in 2023 should be more than 1.5 million barrels per day.
“EIA’s view of only raising global crude oil demand by 50,000 barrels per day in 2023 is too conservative. The market needs time to correct certain mistakes. It is recommended to remain patient and wait for the situation to become clear. As more information becomes clear in the future, oil prices are expected to remain There will be larger fluctuations.” Yang An said.
“The key to the current trend of oil prices is the demand side.” Liu Shunchang, an energy analyst at Nanhua Futures, believes that the economic growth of the United States and Europe is facing increasing pressure. The World Bank has sharply lowered its global economic growth forecast for 2023. From the perspective of forward-looking indicators, there is a high probability that the United States and Europe will enter recession reality in 2023 from the current recession expectations. The ISM non-manufacturing PMI of the United States in December 2022 released last week was significantly lower than expected. It shows that the momentum of economic growth is rapidly weakening, and the demand side of crude oil continues to face pressure and continues to increase.
In his view, domestic transportation has recovered rapidly recently and China’s crude oil demand has improved significantly. But global crude oil demand mainly depends on the United States and Europe, followed by China. “With the economic growth momentum in the United States and Europe weakening, the recovery in domestic crude oil demand will have limited benefit to oil prices.”
“Changes on the demand side will be the most concerning factor in the crude oil market in the next period of time, which also determines the direction and rhythm of oil prices.” Yang An said, while the supply side needs to guard against some uncontrollable sudden factors that trigger supply Reduced shock.
The reporter learned that the international crude oil market has experienced low inventories for a long time. Because EIA’s forecast of demand growth is low, it is expected that there will be a certain accumulation of inventory during the year.
Data from the American Petroleum Institute (API) said U.S. crude oil inventories unexpectedly surged last week, while gasoline and distillate inventories also climbed. In the week ended January 6, crude oil inventories surged by about 14.9 million barrels, gasoline inventories increased by about 1.8 million barrels, and distillate inventories increased by about 1.1 million barrels.
In Li Yunxu’s view, the current supply side of the crude oil market is facing a reduction in Russian oil volume and OPEC’s stabilization of production, and the expected deviation is not large. If there are more changes in inventory, we need to pay attention to the final evolution of demand.
“Currently, the supply and demand side of crude oil has not evolved significantly beyond market expectations in a single week, but market differences are still emerging near Brent’s $80/barrel mark.” Li Yunxu said that from the forecastFrom the perspective of marginal changes at the �� level, while Russian oil export expectations on the supply side are relatively stable, concerns about further decline in overseas demand and optimism about domestic demand have continued the long-short tug-of-war, increasing uncertainty in the price rhythm.
“However, judging from the core factors of supply and demand in the first quarter, the recovery of Chinese demand and the decrease in Russian oil supply have made the supply side still relatively tight. It is expected that the current profit-loss ratio is still relatively favorable to bulls.” Li Yunxu said.
In terms of macro-level impact, U.S. CPI data has a greater impact on the Fed’s interest rate hike expectations. Once the data is strong, the Fed’s interest rate hike expectations increase, which may be negative for risky assets including crude oil.
It should be noted that the recent increase in fluctuations in the U.S. dollar has significantly affected oil prices during the session. If U.S. inflationary pressures are further eased, it will be a periodic positive for oil prices.
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